Comparative Advertising and Trademark Depreciation Claims

Author: Marsha Simone Cadogan

The law allows comparative advertising if it is truthful, not misleading, and complies with trademark, consumer protection, and competition laws. The rules governing the distribution and marketing of products are set out in several statutes, including the Trademarks Act and the Competition Act. Trademark depreciation claims are addressed under s.22 of the Trademarks Act, which prohibits the use of a registered trademark in a way that affects its goodwill.[1] Its goodwill is the positive association that attracts consumers to the owners’ goods rather than to others. Consumer confusion is not a requirement for a s. 22 claim. One of the more recent cases decided in this area was Energizer v Duracell. The Federal Court of Canada (FC) clarified what is legally permissible when competitors use comparative advertising as part of their advertising strategies. This case pertained to claims of trademark depreciation and the use of false or misleading statements about a competitor’s product.

Energizer and Duracell are battery manufacturers. The circumstances that gave rise to the claim were the shipment and sale of Duracell packages bearing Energizer’s MAX AA and Energizer HA stickers into Canada. Energizer Max is a registered trademark of Energizer. In marketing products and services, manufacturers sometimes use comparative slogans to highlight how their products perform relative to competitors’. Under the Trademarks Act, these slogans are permissible if they do not run afoul of its provisions. Duracell’s packaging also included a slogan which stated its products were longer-lasting than Energizer and used the words “the bunny brand, “next leading brand,” and “Energizer Max” on its packaging.

The FC held that Duracell’s use of Energizer’s registered trademark had depreciated Energizer’s trademark. Energizer had satisfied the four-part test for trademark depreciation.[2]  This requires establishing that:

(a) The defendant had used the plaintiff’s registered trademark with goods or services, with those of its own;

(b) The plaintiff’s registered trademark is sufficiently well known to have a significant degree of goodwill attached to it.

(c) There is a linkage between the defendant’s use of the trademark and its value or reputation to consumers and,

(d) The likely effect is to depreciate or cause damage to the value of the goodwill.[3] Each element of the test must be met.

 A trademark cannot depreciate if it has no goodwill. The FC found substantial goodwill attached to Energizer’s registered trademarks, and Duracell’s use of those trademarks would likely cause their value to depreciate.  A permanent injunction was ordered against Duracell, enjoining it from using Energizer’s trademarks and the stickers bearing Energizer’s trademarks and logo on Duracell’s battery packages. Damages were also awarded against Duracell for using the trademarks in a loose or gossipy manner, in other words, for “bandying about” its trademark.

The Comparative Advertising Statements were not false or misleading

However, Energizer failed to establish that Duracell’s statements were false or misleading. The FC found the impugned words truthful and unambiguous. The FC found no trademark depreciation due to Duracell’s use of the “bunny brand” on the packaging, as there was no negative impact on the trademark’s goodwill. In addition, the phrase “the next leading brand” was inconspicuous on the packaging and unlikely to resonate with the average consumer who does not spend time scrutinizing or considering the product before purchasing.[4]

Importance to businesses

The law allows a competitor to make comparative statements about its goods or services within legal limits. This does not extend to the use of the owner’s registered trademark on a competitor’s product or in advertisements without their permission.

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[1] Trademarks Act RSC 1985, c T-13

[2] Veuve Clicquot Ponsardin v Boutiques Cliquot Ltée, 2006 SCC 23.

[3] Ibid; Energizer Brands, LLC  and  Energizer Canada Inc. v The Gillette Company, Duracell Canada, Inc., Duracell U.S. Operations, Inc., and Procter & Gamble Inc, 2023 FC 804, para. 88.

[4] Masterpiece Inc. v Alavida Lifestyles Inc., 2011 SCC 27.

[5]  Competition Act, RSC., 1985, c. C-34 s. 52, Trademarks Act RSC 1985, c T-13.

This post is for general information purposes only, and is not intended as legal advice.

For legal advice in this area, you may contact Marsha.